Sunday, January 23, 2011

GSK's U.S. Sales Reps "Europeanized": No Longer Rewarded for Ability to Push Prescriptions

According to the Financial Times, "GlaxoSmithKline will this month scrap payments to its US-based commercial staff based on individual sales targets, as it attempts to draw a line under past aggressive marketing practices that have incurred substantial fines" (see here).

GSK’s sales "reps" will no longer receive commissions "based on their ability to push prescriptions. They will instead be paid based on their scientific knowledge, feedback from customers and the performance of their business unit."

An anonymous poster to CafePharma described what the "new" sales model will look like:

You will be judged on 3 categories. Product Knowledge, Customer Value, and Business Acumen. Each one of these will be split into 2 parts. Preparation and implementation. Basically, 6 categories to be subjectively assigned expertise levels by your manager. Hope you have a good relationship... This is how you will get your "cut" of your region's take of bonus dollars.

Oh yeah... you are also no longer referred to as pharmaceutical sales reps... from now on you are called "Customer Facing Staff". No joke...

GSK recently revealed a $3.5bn charge to settle product liability lawsuits and regulatory fines linked to past sales practices (see story here), which may have prompted this change as well as changes in funding physician continuing medical education (CME): GSK will now restrict funding CME courses to a small number of non-profit institutions.

This seems to be a radical shift in the evolution of the pharma sales model that has been followed by companies like Kantar Health. I've written on this subject in several Pharma Marketing News articles over the past year or so. See this recent article: "The Changing Pharma Commercial Model in 2010 and Beyond" (use discount code '95MDK' to download it free).

I also note that in order for a pharma company to reward its sales reps based on prescription volume of physicians they have detailed (the "old" model), the company has to have access to the prescription writing data of individual physicians. It's not a coincidence perhaps that the Supreme Court will soon determine if states have the right to prevent access to that data by pharma companies (see "Supreme Court to Decide Fate of State Laws that Prohibit Use of Rx Records by Pharma"). GSK may be sensing that the decision will go against them and they can take the "high" voluntary road now instead of taking the "low" legally-forced road tomorrow.

Although this model may be new in the U.S., it's not so new in Europe where pharma companies never had access to individual physician prescribing behavior. In Europe -- as I understand it -- pharma companies can only see how prescriptions change among a block of physicians in a certain geographical area more or less equivalent to a zip code in the U.S. Thus, basing sales rep commissions upon "district" performance in the U.S. is similar to how it's done in the EU. From the anonymous post made to CafePharma cited above, it looks like U.S. reps are not going to be happy to be "Europeanized."

1 comment:

Certainly! U.S. sales reps will not be happy with this report. Changing the method of receiving commissions which have been practiced by most reps will eventually create a stir among them. Wild or even annoying reactions will be heard with the progress of this new scheme. I wonder how my nephew would react to this.:)

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Pharmaguy™ (@pharmaguy) is a "constructive critic" of the pharmaceutical industry. He is not shy about giving his opinion, which is respected by many insiders who share some of his views but who are unable to voice them on their own.